New oil dispute threatens prospects for peace between Sudan and South Sudan

By staff writers
January 16, 2012

Reports of the confiscation of South Sudan’s oil by the Republic of Sudan threaten the region’s prospects for peace and the negotiation of a new oil deal, said Global Witness today (16 January).

The two countries must agree to a new and transparent arrangement soon or risk seeing the situation deteriorate into renewed conflict.

Both countries are scheduled to return to the negotiating table tomorrow (17 January) but tensions are high amidst reports of export disruption and confiscation of crude oil by Sudan.

A new report by Global Witness, published ten days ago, said that persistent calls for clear and transparent information on Sudan’s oil revenues have yet to yield satisfactory information. With a referendum on independence for southern Sudan just days away, oil sector transparency is now more important than ever to preserving the fragile peace between north and south.

The report, Crude Calculations, acknowledged some promising recent developments, but raises significant questions about the implementation of the current oil wealth-sharing agreement.

The South Sudanese government claimed on 10 January that Khartoum had diverted southern oil to Sudanese refineries and storage facilities, and prevented the loading or departure of five tankers meant to carry 3.4 million barrels of crude oil out of Port Sudan. Sudan says it has not stolen the oil, but rather is taking its rightful share in kind until a transit deal is agreed.

“Any disruption in the transit and export of oil could have damaging financial consequences for Sudan, South Sudan, their investors, and export partners. It is crucial that this dispute is resolved immediately,” said Dana Wilkins, Global Witness campaigner. “A new deal that guarantees transparent and accountable management must be agreed to prevent further tension.”

The agreement of a new deal governing how South Sudan’s oil is exported and how funds are managed is critical to both countries’ economies. Options on the table include a direct transfer of funds to assist in Sudan’s financial transition, debt forgiveness, a per-barrel transit fee, or some combination of the three.

Whatever the arrangement, both countries need to be far more transparent about the production, processing, and sale of oil if any agreement is to be sustainable says Global Witness. Details of all shipments, revenues, and fees paid and received will need to be published and independently verified. Without this, recent history shows that mistrust over oil revenues could quickly give rise to tensions, instability, or worse.

“In the absence of independent verification on the movement and export of the crude, it is impossible for anyone to be sure of exactly what is happening, who will be affected, and how,” added Wilkins.

“What is certain is that this latest dispute again proves that transparency and accountability across the oil sector are essential to building a sustained peace between the two countries.”


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